Debentures

Subordinated debentures

Income bonds

Mortgage bonds

Collateral trust bonds

Equipment trust certificates

Zero$-($or low$-)$ coupon bonds

Junk $($high$-$yield$)$ bonds

Floating$-$rate bonds

Extendible notes

A$.$ Payment of interest is required only when earnings are available. Commonly issued in reorganization of a failing firm.

B$.$ Secured by stock and $($or$)$ bonds that are owned by the issuer. Collateral value is generally $25\%$ to $35\%$ greater than bond value.

C$.$ Stated interest rate is adjusted periodically within stated limits in response to changes in specified money market or capital market rates. Popular when future inflation and interest rates are uncertain. Tend to sell at close to par because of the automatic adjustment to changing market conditions. Some issues provide for annual redemption at par at the option of the bondholder.

D$.$ Used to finance "rolling stock," such as airplanes, trucks, boats, railroad cars. A trustee buys the asset with funds raised through the sale of trust certificates and then leases it to the firm; after making the final scheduled lease payment, the firm receives title to the asset A type of leasing.

E$.$ Debt rated Ba or lower by Moody's or BB or lower by Standard & Poor's. Commonly used by rapidly growing firms to obtain growth capital, most often as a way to finance mergers and takeovers.

F$.$ A significant portion $($or all$)$ of the investor's return comes from gain in value $($i$.$e$.,$ par value minus purchase price$).$ Generally callable at par value.

G$.$ Unsecured bonds that only creditworthy firms can issue. Convertible bonds are normally these.

H$.$ Claims are not satisfied until those of the creditors holding certain $($senior$)$ debts have been fully satisfied.

I. Secured by real estate or buildings.

J$.$ Short maturities, typically $1$ to $5$ years, that can be renewed for a similar period at the option of holders. Similar to a floating$-$rate bond.